Advertisement
UK markets closed
  • FTSE 100

    7,893.81
    +16.76 (+0.21%)
     
  • FTSE 250

    19,388.61
    -62.06 (-0.32%)
     
  • AIM

    744.46
    -0.83 (-0.11%)
     
  • GBP/EUR

    1.1635
    -0.0048 (-0.41%)
     
  • GBP/USD

    1.2410
    -0.0028 (-0.23%)
     
  • Bitcoin GBP

    51,961.11
    +559.55 (+1.09%)
     
  • CMC Crypto 200

    1,374.08
    +61.46 (+4.92%)
     
  • S&P 500

    4,991.50
    -19.62 (-0.39%)
     
  • DOW

    37,930.61
    +155.23 (+0.41%)
     
  • CRUDE OIL

    83.05
    +0.32 (+0.39%)
     
  • GOLD FUTURES

    2,406.80
    +8.80 (+0.37%)
     
  • NIKKEI 225

    37,068.35
    -1,011.35 (-2.66%)
     
  • HANG SENG

    16,224.14
    -161.73 (-0.99%)
     
  • DAX

    17,741.17
    -96.23 (-0.54%)
     
  • CAC 40

    8,023.26
    0.00 (0.00%)
     

Oil majors press Iran for sweeter oil terms post-sanctions

By Rania El Gamal and Dmitry Zhdannikov

ABU DHABI, Nov 10 (Reuters) - Iran will have to offer lucrative contracts terms to draw back international oil companies at a time when the oil industry is more focused on profitability as it gears up for a longer period of low oil prices, executives said on Tuesday.

Iran said in September it had approved a draft of international oil and gas contracts to attract foreign investors and oil buyers once international sanctions are lifted but has not provided details so far.

The OPEC member will announce new oil and gas contracts at conferences in Tehran and London on Nov. 21-22 and Feb. 22-24 respectively.

ADVERTISEMENT

"It (Other OTC: ITGL - news) is not only questions of resources or opportunities, it is a question of profits," Total (Swiss: FP.SW - news) 's chief executive Patrick Pouyanne told a conference in Abu Dhabi, capital of the United (Shenzhen: 000925.SZ - news) Arab Emirates.

"We will be well positioned to look at opportunities in gas, oil, petrochemicals and marketing. But all that is subject to good contractual conditions, so we will see."

Pouyanne said Total was likely to attend the Tehran conference where the oil ministry will reveal the framework of the contracts.

Iran said the new ones would be a major improvement not only on the so-called buy-back contracts but also on those that neighbour Iraq offered to foreign oil companies in 2009-2010.

Oil majors have said they would return to Iran if it made big improvements to the pre-sanction buy-back contracts, which some foreign companies complain made them no money or even incurred losses.

"Today buy-back contracts would not attract anyone for the lack of oil price upside and reservoir upside," Shell (LSE: RDSB.L - news) 's integrated gas director Maarten Wetselaar told a news briefing.

"Iraq would today also struggle to get those contracts away."

Oil companies operating in southern Iraq, such as Shell and Total, have often complained about the tough terms offered by Baghdad as well as security concerns and infrastructure constraints.

"At the moment the industry is more constrained in financial resources rather than opportunity-constrained," Wetselaar said, adding that this had been shown by some recent auctions in places such as Mexico generating tepid interest.

The sanctions have halved Iran's oil exports to around 1.1 million barrels per day from a pre-2012 level of 2.5 million bpd. The loss of oil income has hampered investment in new development and the country has struggled to pay for equipment and services.

Iranian officials say they would be able to raise crude production by 500,000 bpd once sanctions are lifted next year, and another 500,000 bpd few months after that.

But many are sceptical saying Iran would need billions of dollars in investments and the know-how of foreign companies help to boost its production after years of under-investment.

"Iran will probably be able to put in the market 400-500,000 bpd but then after it would take time," said Pouyanne. (Editing by David Evans)